Taxpayers can file their returns even after the July 31 due date lapsed, nevertheless it’s no aid for individuals who opted for a brand new regime that supplied to tax them at a decrease fee.
First introduced within the Union Price range on February 1, 2020, this new income-tax regime affords the decrease fee of taxation to those that don’t declare as many as 76 tax deductions.
Many people selected the choice in 2020-21 – the first monetary yr that the regime was carried out. However the due date for submitting of returns was prolonged due to COVID-19.
Therefore, the brand new tax regime seekers awaiting an extension in tax submitting deadline have been caught in a repair. To assert the advantages of the decrease tax regime, it’s important to file your returns by the due date.
“If one is submitting belated return, then the brand new tax regime advantages can’t be claimed. The brand new tax regime declaration mentions that one has to file returns below Part 139 (1) throughout the deadline to say the advantages,” says Paras Savla, associate at KPB & Associates.
For the self-employed, if they’ve opted for the brand new regime, it’s out there for a lifetime; they’ve an opportunity of adjusting it as soon as after selecting the choice.
“However for a salaried particular person, the tax regime – new or present – may be chosen yearly,” says Savla.
Penalty and better taxes
Other than paying a Rs 5,000 late submitting penalty, late filers must pay extra tax, too, this yr.
“No matter TDS has been deducted, there may very well be a scarcity ensuing from the change in regime based mostly on the revenue degree of the individual and the investments which have been made throughout the monetary yr,” says Ameet Patel, associate at Manohar Chowdhry & Associates.
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If there may be extra tax legal responsibility, then it must be paid because the taxpayers must use the present tax regime.
Beneath the brand new system, the brink is just not totally different for senior residents and so-called tremendous senior residents and different people.
A decrease fee of 10% of the revenue is relevant to these having revenue between Rs 5 lakh and Rs.7.5 lakh as towards 20% below the outdated tax regime.
“As an example, somebody who has an revenue of Rs 14 lakh -15 lakh and opted for the brand new tax regime because it was helpful, the tax deducted at supply was as per new regime charges. Because the tax charges are decrease for the brand new tax regime one would wish to pay extra tax in the event that they haven’t filed the returns throughout the deadline,” says Savla.
One other space of concern for individuals who have been meaning to comply with the brand new tax regime throughout the monetary yr is that they aren’t permitted to say 76 tax deductions and therefore they didn’t make investments to avoid wasting taxes throughout the yr.
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“A brand new tax regime would suggest a decrease tax fee; nonetheless, it doesn’t allow tax deductions,” says Amit Gupta, MD, SAG Infotech.
Deductions and exemptions resembling Sections 80C, 80D, Housing Hire Allowance, depart journey allowance, clubbing advantages for minors and so forth aren’t permitted below the brand new regime.
Many could not even have saved in the suitable devices to say deductions.
For such individuals, there are particular bills that may be claimed below the belated returns that they might now must file based mostly on the outdated regime.
“If they’ve paid medical insurance premium for self and fogeys, they might declare the Part 80 D advantages below the belated returns, even when the employer hasn’t been notified about the identical. Moreover, college tuition charge may be claimed,” suggests Savla.
Problem in calculations
However since these deductions weren’t claimed with the employer, the Kind 16 numbers wouldn’t suffice and you would need to do a good bit of calculation to reach on the precise taxable revenue.
“Those that need to now file belated returns below the present tax regime would face critical difficulties because the Kind 16 calculations are based mostly on the brand new tax regime and the figures could not match,” says Patel.
So, make sure you search assist from knowledgeable and in addition be looking out for follow-up emails from the revenue tax division, because the determine of your returns wouldn’t essentially match these talked about within the Annual Info Assertion and Kind 26 AS for tax deducted at supply.
Choose the suitable regimeSalaried people and pensioners can select between the outdated tax regime and the brand new concessional tax regime in each evaluation yr based mostly on their comfort.
Nevertheless, taxpayers having enterprise or skilled revenue don’t have the leeway to decide on between the 2 tax regimes in each monetary yr. Such taxpayers can have just one possibility to modify between the 2 regimes.
“Throughout ITR submitting, you possibly can select both of them. However to have most tax financial savings, it is very important choose appropriate tax regimes at first of the monetary yr,” says Gupta.